Time and a half is two payments in one: the regular rate for each overtime hour, plus a premium of half that rate. The IRS deduction for overtime on a 2025 return reaches only the premium half, meaning pay that exceeds the regular rate under the Fair Labor Standards Act. A pay stub’s overtime total is therefore larger than the amount a filer can deduct, and the gap is bigger than the word “half” suggests.
Splitting a time-and-a-half paycheck into its two parts
The Labor Department’s overtime page states the base rule: unless exempt, covered employees “must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.” The IRS ties its deduction to the same law. Its fact sheet on the deductions describes qualified overtime as pay “exceeding the regular rate under the Fair Labor Standards Act.”
An illustration shows the arithmetic. This example is not from the IRS. A worker with a regular rate of $24 an hour who works 10 overtime hours is paid $36 for each of them, or $360. The regular-rate part of that is 10 times $24, or $240, and that part is ordinary wages. The premium is 10 times $12, or $120. Only the $120 is the kind of pay the deduction covers, which is one-third of the overtime paycheck rather than one-half.
The shorthand “premium half” is this article’s, not the IRS’s. The agency speaks only of pay above the regular rate, and the half of time and a half is simply the plain-language name for that excess. A filer who deducted the whole $360 in the example would be claiming $240 of ordinary wages that the rule does not reach.
Why a W-2 will not settle the question
The deduction has to be supported by what is reported on a W-2, a 1099 or a similar statement, the IRS fact sheet says. For 2025 that is the weak point. In its separate guidance on what a filer will need, the agency says qualified overtime amounts “will likely not be separately identified on 2025 Forms W-2.”
The same guidance tells filers to keep pay stubs or payroll summaries showing overtime pay. Those documents show what was paid for overtime hours. Splitting that into the regular-rate portion and the premium is arithmetic the filer, a payroll department or a tax preparer has to do, and the IRS pages read for this article do not provide a worksheet for it.
Salaried workers and the federal exempt line
The word “overtime” on a paycheck does not always mean the Fair Labor Standards Act applied. The Labor Department’s page on salary levels sets the standard salary level for exempt executive, administrative and professional employees at $684 a week, equivalent to $35,568 a year. It also lists a highly compensated employee threshold of $107,432 a year, which must include at least $684 a week paid on a salary or fee basis.
Because the overtime rule covers employees “unless exempt,” a worker properly classified as exempt has no federal overtime pay and so no premium to deduct. The IRS wording ties the deduction to the federal rule. The IRS page read does not discuss extra pay that an employer or a state calls overtime outside that rule, so the premium to deduct is the one the federal law requires.
Caps and income limits on top of the premium
Once the premium is isolated, two limits apply. The IRS says the overtime deduction is capped at $12,500, or $25,000 on a joint return, and phases out above $150,000 of modified adjusted gross income, or $300,000 jointly. In the IRS description of Schedule 1-A, the deduction is claimed on the new schedule, and it requires a Social Security number valid for employment.
Taking the earlier example, a premium of $120 is far below any cap. Reaching $12,500 would take a premium of about $1,042 a month for a full year. At the $12 premium per hour in the illustration, that is roughly 87 overtime hours every month.
Married filers carry one more condition. The IRS fact sheet says a couple must file jointly to claim the overtime deduction, and the joint cap of $25,000 is twice the single filer’s.
An October 15 deadline for a return on extension
The deduction applies to tax years 2025 through 2028, and a 2025 return filed on extension is due Thursday, October 15, 2026. The IRS page on filing extensions, last updated September 20, 2026, gives that date and says an extension is only for filing, not for paying tax owed. A filer still gathering payroll summaries has 14 days from publication of this article.
The Labor Department’s overtime page says a covered employee’s workweek is “a fixed and regularly recurring period of 168 hours,” and that employers cannot average hours across weeks. Overtime is therefore counted week by week, and the pay stubs that record those weeks are the raw material for the premium calculation.
For a refund that goes missing after the return is filed
The IRS Refund Recovery Kit is written for taxpayers whose refund is marked as sent but never shows up. It is a standalone resource for that problem and has nothing to do with overtime or any particular deduction.
The IRS Refund Recovery Kit includes the refund-trace steps (Form 3911) and a notice decoder inside its 13-page kit.
Look up the refund-trace steps for a check that never arrived →
This article was drafted with AI assistance and checked against the IRS and Labor Department pages it links.
